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Tag: construction

  • These Housing Innovations Remove The Risk Of Rising Climate Threats

    These Housing Innovations Remove The Risk Of Rising Climate Threats

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    As you read this you may be experiencing one of the hottest days in history in your area or breathing smoke from a wildfire. These situations are more and more common, causing physical impacts, but also bringing process and design questions into discussion.

    Adaptation means taking on responsibility for those who live in dangerous areas. Through smart innovations in new home design and construction and advanced retrofits, people can be protected, live well and even save energy costs.

    In 2018, Hurricane Michael wrecked 60,000 homes causing $25 billion in total damages according to InsideClimate News. When that storm hit, Annette Rubin was at home with a newborn, healing from a C-section. Listening to the impact of the storm outside her home and fearing for her baby and her own life, Rubin started thinking about building code and how or if her home was going to protect her.

    In a frantic state, she pulled out the house plans to see what the five-year-old home could withstand. It was built to the standard category three level winds that are building code in that area and the forecast was showing that Hurricane Michael was a more severe category five storm.

    “I thought if it hits our house, we probably won’t make it,” she said. “We couldn’t leave. We couldn’t go down because of storm surge, and it wasn’t safe to go up. Luckily for us, it went over us and hit east of us, but it was traumatizing enough that I wanted to figure out a different way to do this because hurricanes aren’t new. They happen every year.”

    After lots of due diligence, Rubin found a strong, sustainable panel system manufactured by Emmedue. Then, she took the next step. She started the company Vero Building Systems to be an owner and operator installing the Emmedue panel system.

    With 77 plants around the world, the technology has been used and distributed for years, but Rubin is the first to bring it to Florida where it exceeds category 5 hurricane resistance and will be able to withstand up to 250-mile-per-hour winds.

    Looking for a proof, she found the panels installed locally in a 7,000-square-foot home that has survived 3 hurricanes in 14 years.

    “He lives a mile from me, has two times the size of our house and pays one-third the price for energy,” she said. “His energy bill is $300. Mine is double. There are no thermal bridges, so it is astronomically better than a traditional stick build.”

    The core of the panels is polystyrene with steel wire mesh on both sides that are welded together for strength. Once the panel is put in place, a layer of shotcrete (a high velocity application of concrete) goes on top of the wire mesh to create a super insulated, strong structure. Plus, extra mesh goes around angles and to reinforce windows and doors.

    VERO panels are not only sustainable when installed, but so is the manufacturing process. Rubin sources a petroleum-based polystyrene feed that is steamed using natural gas to compress it down. Plus, everything in the plant is recycled, from the beads to the wires, and the manufacturing has no off gassing.

    “We are able to cut emissions by about 40% during an onsite installation,” Rubin said. “There is no heavy machinery. Plus, we cut about 60% of emissions over the lifetime of the building.”

    Most of the work is in manufacturing the panels, that are very light and easy to install on site. Rubin estimates that VERO’s installation process could be up to 40% less time from traditional building methods.

    “We did a whole house in two and a half days with installers speaking three different languages,” she said. “One installer had experience and two did not.”

    With the energy savings and the added protection, the system has about a 5% premium compared to stick-built construction.

    VERO ships nationwide and also is working on a package for tornado safe rooms, again with the capability to withstand more than 250-mph winds.

    Protecting Homes… And Dollars

    Some of the solutions that jurisdictions are exploring to help their communities are focused on reactive measures like evacuation plans and risk communications, along with proactive measures like new zoning, building codes, and improvements to the physical landscape.

    These are hefty, include many different stakeholders to move forward, and therefore need long timelines to come to fruition. In today’s market, the longer the timeline, the more housing costs go up. So, more people are forced into migrating to the areas with the highest climate risks so they can find affordable housing options, which means that people not only need resilient housing, it has to be affordable as well.

    Chris Anderson is the CEO at Greensborough, North Carolina-based, modular home building company Vantem that delivers a solution at only $100 per square foot. This product, backed by Bill Gates’s Breakthrough Energy fund, is made with refractory materials to be fire resistant, survives category 5 hurricane damage, and withstands up to 8.2 magnitude earthquakes.

    To address the migration into coastal areas in Florida, Vantem acquired a plant in southern Georgia to build fast and efficiently.

    “The homes are built like on an automotive construction line and all MEP [mechanical, electrical and plumbing] is already installed when it is delivered to the job site,” said Anderson. “The factory will be converted by early 2024, and we are looking at two other facilities to get to 20 plants over the next 10 years.”

    Vantem is looking for joint ventures with local developers that have strong pipelines aimed at affordable housing in high risk climate markets.

    Similar to VERO, Vantem is already accepted and well used around the world, with more than three million square feet currently built out across the globe. In the United States, Vantem has code approvals to build up to three stories.

    Anderson says that even with the cost and process efficiencies, solutions can be customized on a large scale.

    “We translate architecture into the Vantem system as fully engineered product for that market,” he said. “Each factory has a particular focus. If you are going to do a lot of multifamily, the factory is designed for that. There are factories specifically designed for single family, like the first in Georgia.”

    At the core of Vantem’s efficiency and sustainability is the innovation of the panel.

    “People who are doing high production modular worldwide are trying to standardize traditional process, but the better way to do it is to simplify the system,” Anderson said. “In modular, you have a water shed between 1 to 5 modules a day to 6 to 10, where high output usually requires a bigger capital expense, but they tried to automate a complex system. Automation applied to inefficiency, just magnifies inefficiency. Our capital expenses are one-fifth the cost of other modular factories.”

    The Need For More Innovation

    Many reports show that the frequency and intensity of climate events will continue to increase. VERO and Vantem have fabulous solutions that will help many in the Florida region now, but as Zillow reports, unchecked greenhouse gas emissions could put 802,555 homes nationwide at risk from a 10-year flood by 2050. Not to mention the other climate disasters impacting the country.

    Efforts like Ed Barsley’s Climate Creatives Challenge offer opportunities to reward innovation in support of new and novel approaches for communicating the impacts of climate change and the benefits of mitigation, adaptation and resilience. As the founder of The Environmental Design Studio, Barsley wants to unleash creative energy to communicate climate related themes to the public, along with adaptive actions.

    The contest is a series of eight challenges and open for entries now, including prize money. Initiatives like this will spotlight the need, bringing much needed innovation forward.

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    Jennifer Castenson, Contributor

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  • ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

    ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

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    The numbers: Home sales inched up for the first time in four months, even as the U.S. housing market continues to deal with a dearth of listings. 

    Pending home sales rose by 0.3% in June from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    The figure exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 0.5% in June.

    Transactions were still down 15.6% from last year.

    Pending home sales reflect transactions where a contract has been signed for the sale of an existing home but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    Big picture: Home sales rose as the housing market contends with excess buyer demand and a shortfall in the supply of homes for sale. 

    Real-estate agents are looking to home builders to fill the gap as rate-locked homeowners hold out on selling. New-home sales surged in May, and while they lost some momentum in June, the broader trend is still upward.

    The prices of new homes, which are generally seen as more expensive, are also coming down. The gulf between the median price of a new home and of an existing home narrowed in June, based on data from the NAR and the federal government. 

    What the real-estate experts said: “The recovery has not taken place, but the housing recession is over,” NAR chief economist Lawrence Yun said. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply.” 

    The NAR also said it expects rates for 30-year mortgages to average 6.4% this year and to fall to 6% in 2024. 

    The NAR also expects existing-home sales to fall 12.9% in 2023 from the previous year, to 4.38 million, before recovering in 2024 to a rate of 5.06 million.

    The group also expects home prices to hold steady this year, falling only slightly by 0.4% to $384,900, before rising 2.6% next year to $395,000.

    “The West — the country’s most expensive region — will see reduced prices, while the more affordable Midwest region is likely to see a small positive increase,” Yun added.

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  • Dow logs longest winning streak in 4 years, sees highest close in 15 months

    Dow logs longest winning streak in 4 years, sees highest close in 15 months

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    U.S. stocks finished higher on Wednesday as the Dow Jones Industrial Average clinched its eighth straight day in the green amid a flurry of corporate earnings reports. The blue-chip gauge
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    finished 108.88 points, or 0.3%, higher at 35,060.81, according to preliminary closing data from FactSet. It marked the first time that the Dow finished above 35,000 since April 20, 2022, and its longest winning streak since September 2019. The S&P 500
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    gained 10.72 points, or 0.2%, to 4,565.69. The Nasdaq Composite
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    gained 4.38 points, or less than 0.1%, to finish at 14,358.02, preliminary data show.

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  • Dow scores 6th day of wins to start busy week for earnings

    Dow scores 6th day of wins to start busy week for earnings

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    U.S. stocks finished at new highs for the year on Monday to kick off a busy week for corporate earnings, with the Nasdaq leading the way up. The Dow Jones Industrial Average
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    rose about 76 points, or 0.2%, ending near 34,585, based on preliminary FactSet data. The S&P 500 index
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    gained 0.4% and the Nasdaq Composite Index
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    closed up 0.9%. That was the Dow’s sixth straight day of wins and marked the highest close since April 2022 for all three major stock indexes, according to Dow Jones Market Data. Equities have rallied as the U.S. economy remains resilient in the face of sharply higher interest rates, keeping investors hopeful about a soft landing, instead of a recession. Treasury Secretary Janet Yellen said on Monday that she doesn’t anticipate a U.S. recession, in an interview with Bloomberg television. After several big banks reported on Friday, second-quarter earnings results continue with Tesla,
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    +3.20%

    Morgan Stanley
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    ,
    Goldman Sachs
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    +0.31%
    ,
    Netflix
    NFLX,
    +1.84%

    and more on deck.

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  • Microsoft Stock Is a Buy, American Tower Can Climb, and More Analyst Reports

    Microsoft Stock Is a Buy, American Tower Can Climb, and More Analyst Reports

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    These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

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  • U.S. bank lending holds steady in latest week

    U.S. bank lending holds steady in latest week

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    The numbers: Commercial and industrial loans — a key economic driver — held roughly steady in the week ending July 5, the Federal Reserve said Friday. Loans rose $200 million to $2.754 trillion, the central bank said.

    Bank lending has been slowly decelerating, falling for three straight months. C&I loans hit a peak of $2.82 trillion in mid-March, right before the collapse of Silicon Valley Bank.


    Uncredited

    Key details: Total bank deposits rose by $24.9 million to $17.367 trillion in the same week. Deposits have been shrinking slowly. They peaked at $18. 21 billion in mid-April.

    Big picture: In the wake of the collapse of Silicon Valley Bank in March, economists have been watching the data carefully for signs of a credit crunch, as banks have weak balance sheets as a result of the Fed’s swift increases in interest rates since March 2022.

    San Francisco Fed President Mary Daly said Monday she hadn’t seen credit tightening that is in excess of normal.

    “I do think, from research literature, that this takes a while to show itself, and so I think we are still looking into the fall before we would have a declarative statement to make about the extent of credit tightening and the impact on the economy,” Daly said.

    Market reaction: Stocks
    DJIA,
    +0.33%

    SPX,
    -0.10%

    finished the week higher on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.832%

    rose to 3.83%.

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  • ‘There’s nothing in the data that shows prices crash’: America’s housing market is showing remarkable resilience

    ‘There’s nothing in the data that shows prices crash’: America’s housing market is showing remarkable resilience

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    The housing market may feel out of whack to home buyers coping with fast-rising home prices and 7% mortgage rates. But like it or not, the housing market is in the pink of health. 

    Several economic indicators that measure housing activity — from home prices to sentiment surveys — show that home builders and sellers (the few that are out there) are finding strong demand from home buyers. 

    News of the housing market’s relative health may be welcome to some — like real-estate agents and investors — but it’s becoming a concern for economists. The more buoyant the housing market, economists say, the more likely the U.S. Federal Reserve will unveil another interest-rate hike, which further heightens the risk of a recession.

    ‘The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents.’


    — Torsten Slok, chief economist at Apollo

    “The housing market has started to recover, and this is a problem for the Fed because more demand for housing will boost home prices and rents,” Torsten Slok, chief economist at Apollo, wrote in a note in May. And housing is a big part of how the government measures inflation, he added. This will make it more difficult to reduce inflation from 5% to the Fed’s 2% inflation target, he said.

    If the Fed launches another rate hike, it would push mortgage rates, which are already in the 7% range, to go even higher. 

    “The housing market is in a very — if fragile — recovery,” Mike Simonsen, founder and president of real-estate analytics firm Altos Research, told MarketWatch. 

    “There appears to be more demand than available supply for homes, especially in the real-estate market,” he explained, which is keeping home prices high, but that doesn’t mean demand could evaporate if the current situation changes. Recall when rates doubled from pandemic-era lows in 2021 to 7% last year, which zapped home-buying momentum.

    House hunters have adjusted their expectations. But if rates were to jump from 7% today to even higher levels, “I would not be at all surprised if homebuyers stopped abruptly again,” Simonsen said, stating his thesis for the fragility of the sector. Americans broadly expect rates to go over 8%, according to a March survey by the New York Federal Reserve.

    MarketWatch looked at three housing-market indicators — and the picture looks rosier than ever:

    Active listings are down — blame interest rates 

    Redfin’s deputy chief economist, Taylor Marr, said his go-to indicator was active listings. 

    Active listings are down this spring, compared to the previous year, according to the company’s data. At the end of June, the number of homes listed for sale on the market was down 8.1% over the prior year.

    “It really captures that supply is pulling back significantly relative to demand,” Marr said.

    About 14 million mortgages were refinanced during the COVID-19 pandemic. Few homeowners find it in their interest to sell their home and give up an ultra-low mortgage rate they secured during that time. Selling a home in July 2023, and purchasing a new one may entail taking a mortgage rate in the 7% range.


    Redfin data says that active listings of homes are down.

    As a result, the housing market is seeing an excess of demand and not enough supply, which has led to a resurgence of bidding wars in some parts of the U.S.

    While this metric is showing signs of the housing market returning to life and heating up amid a shortage of houses for sale, Marr said he’s not yet ready to call it a recovery. “It’s hard to declare completely the bottom of the housing market,” he said.

    Still battle-scarred by the housing crash of the Great Recession, Marr said economists “might be hesitant” to say that the housing market is in recovery mode. “We still have a lot of uncertainty with the economy ahead,” he added. “If the economy really takes a turn three or four months from now for whatever reason, it could certainly bring the housing market back lower than it was even last November,” he added.

    The price gap between new and existing homes

    With a major shortage of resale homes, new-home sales have been taking off. 

    Home builders, understandably, are thrilled about the inventory shortage. 

    The National Association of Home Builders measures builders’ sentiment in a monthly index, and that indicator has been very cheery of late. In June, the index turned positive for the first time in nearly a year. Builders were scaling back price reductions; they were happy about current sales conditions as well as sales over the next six months, the NAHB said.

    “A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” said Rob Dietz, chief economist of the NAHB.

    One of the major U.S. home builders, Lennar, also offered some commentary on its second-quarter earnings call last month. The company’s executive chairman, Stuart Miller, said that “the market and the economy will remain constructive for home builders as pent-up demand continues to come to market and consume affordable offerings.”

    Miller also doesn’t expect the supply issue to be fixed anytime soon: “We believe that the supply constraint will continue to limit available inventory and maintain supply-demand balance,” he said on the call. “The core elements of the supply shortage will not resolve in the near term as the almost 15-year production deficit will take years to resolve.”

    Home-builder confidence, as a result, is signaling high optimism about the future of the housing market, and a return to normalcy.

    As a result, housing starts have spiked as builders scramble to meet the demand. 


    Builders have ramped up building new single-family and multi-family homes.

    Ali Wolf, chief economist at Zonda, looks at how prices of new homes trend relative to resale homes as a key indicator of the health of the housing market. Her conclusion? Housing industry professionals involved in the construction and sale of new homes are out of a recession, given the robust demand. 

    In fact, demand has been so strong that new homes — generally considered to be more expensive than resales — have become more affordable in home buyers’ eyes given the competition in the existing home space. 

    Typically, new homes are 20% more expensive than resales, Wolf said.  And today? That spread has fallen to 4%. 

    So what’s going on? Builders are not necessarily slashing prices. Instead, existing home prices have risen as homeowners are reluctant to sell.

    That’s a good deal for buyers. New homes, Wolf said, are traditionally considered a “luxury good.” They’re brand new, and buyers can often customize them. They also require less maintenance than older homes.

    Sellers are holding out on cutting prices

    Simonsen, who leads Altos Research, said price cuts were his go-to indicator to gauge the health of the real-estate market. Specifically, price cuts formed a proxy for demand, he explained.

    “When the houses are on the market, if there are no buyers for the current houses that are listed, people start taking price cuts,” Simonsen said. 

    And to be clear, price cuts jumped last year, when rates jumped, he added. 

    But that dynamic has since changed, as seen in the chart below. “There are currently fewer price reductions now than in 2018 or 2019,” Simonsen said.


    Data from Redfin says that homeowners aren’t cutting prices on their homes when selling, possibly due to strong interest from buyers.

    And for those of you holding out for home prices to crash? Keep waiting, Simonsen said.

    “There’s nothing in the data that shows prices crash,” he said. Even if a recession hits at the end of the year, which results in more job layoffs, demand for home-buying falling, and an increase in foreclosures and distress, that’s still a few years from now, he added. 

    “There’s no signal of home prices crashing anywhere,” Simonsen added.

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  • With house prices this high, boomers may want to become renters

    With house prices this high, boomers may want to become renters

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    If you’re a retiree and you’re trying to square the circle of rising costs, longer lifespans, more expensive medical care and turbulent markets, don’t be afraid to run the numbers on your biggest investment.

    That would be your home — if you own it.

    U.S. house prices are now so high that it is almost impossible for seniors not to ask themselves the obvious question: “Should we cash in, invest the money, and rent?”

    Right now the average U.S. house price is nearly $360,000. That’s about a third higher than just a few years ago, before the COVID-19 pandemic. The lockdowns, the panic, the stimulus checks and 2.5% mortgage rates have all passed into history. But the sky-high prices remain — for now.

    After several years of double-digit percentage increases, apartment-rent growth is falling for only the second time since the 2008 financial crisis. WSJ’s Will Parker joins host J.R. Whalen to discuss.

    At these levels, analysts at Realtor.com — which, like MarketWatch, is owned by News Corp.
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    say that in 45 out of 50 major U.S. metropolitan areas it is cheaper to rent than it is to buy a starter home. The Atlanta Federal Reserve Bank says national housing affordability is abysmal — about where it was in 2006 and 2007, during the big housing bubble.

    There is a similar story for seniors. Federal data show that the average U.S. house price is now nearly 17 times the average annual Social Security benefit — an even higher ratio than it was in August 2008, just before Lehman Brothers collapsed. At that juncture, the average house price was 15 times higher.

    U.S. National Home Price Index vs. average rent of primary residence in U.S. city, according to the U.S. Bureau of Labor Statistics. Indexed: January 1987=100.


    S&P/Case-Shiller

    Our simple chart, above, compares average U.S. home prices with average U.S. rents, going back to 1987. (The chart simply shows the ratio, indexed to 100.) The bottom line? House prices are very high at the moment compared with rents — again, prices are about where they were in 2006-07.

    And the two must run in tandem over the long term, because the economic value of owning a house is not having to pay rent to live there.

    If there are times when, in general, it makes more financial sense for seniors to rent than to own, this has to be one of those.

    Seniors who own their own homes may think high interest rates on new mortgages don’t affect them. They most likely either already have a mortgage at a lower, older rate or they’ve paid off their home loan. But if you want to sell, you’ll almost certainly be selling to someone who needs a mortgage.

    If borrowing costs drive down real-estate prices, seniors who hold off on selling may miss out on gains they may never see again. After the last housing peak, in 2006, it took a full decade for prices to recover fully. Those who sold when the going was good had the chance to buy lifetime annuities at excellent rates or to invest in stocks and bonds that overall rose about 80% over the same period.

    As I mentioned recently, there is a broad basket of real-estate trusts on the stock market that are publicly traded landlords. You can sell your home and invest in thousands at a click of a mouse.

    But should you?

    Incidentally, there is also an exchange-traded fund that invests in residential REITs, Armada’s Residential REIT ETF
    HAUS,
    -0.53%
    ,
    though in addition to single-family homes and apartment-complex operators, about 25% of the fund is invested in companies involved in manufactured-home parks and senior-living facilities.

    For each person, the math will be different, and there are a number of questions you need to ask. Where do you want to live? How much would you get if you sold your house? How much would you pay in taxes? How much would it cost to rent the right place? Do you want to leave a property to your heirs? And what would be the costs of moving — both financial and emotional?

    The conventional wisdom is that you should own your home in retirement.

    “I would advise any and all retirees against renting if at all possible,” says Malcolm Ethridge, a financial planner at CIC Wealth in Rockville, Md. “You need your costs to be as fixed as possible during retirement, to match your income being fixed as well. If you choose to rent, you’re leaving it up to your landlord to determine whether and by how much your No. 1 expense will increase each year. And that makes it very tough to determine how much you are able to allocate toward everything else in your budget for the month.”

    A key point here, from federal data, is that nationwide rents have risen year after year, almost without a break, at least since the early 1980s. They even rose during the global financial crisis, with just one 12-month period where they fell — and then by only 0.1%.

    “My general advice for clients is that owning a home with no mortgage in retirement is the best scenario, as housing is typically the highest cost we pay monthly,” says Adam Wojtkowski, an adviser at Copper Beech Wealth Management in Mansfield, Mass. “It’s not always the case that it works out this way, but if you can enter retirement with no mortgage, it makes it a lot easier for everything to fall into place, so to speak, when it comes to retirement-income planning.”

    “Renting comes with a lot of risk,” says Brian Schmehil, a planner with the Mather Group in Chicago. “If you rent, you are subject to the whims of your landlord, and a high inflationary environment could put pressure on your finances as you get older.”

    But it’s not always that simple.

    “With housing costs as high as they are now though, renting may be a viable solution, at least for the moment,” says Wojtkowski. “We don’t know what the housing-market trends will be going forward, but if someone is waiting for a housing-market crash before they move, they could very likely be waiting for a long time. We just don’t know.”

    “Any decision comes with pros and cons,” says Schmehil. “Selling when your home values are historically high and renting allows you to capture the equity in your home, which is usually a retiree’s largest or second-largest financial asset. These extra funds allow you to spend more money on yourself in retirement without having to worry about doing a reverse mortgage or selling later in retirement, when it may be harder for you to do so.”

    Renting also allows you to be more flexible about where you live, for example nearer your children or grandchildren, he adds.

    And as any experienced property owner knows, renting also brings another benefit: You no longer have to do as much work around the house.

    “Renting is great in that you don’t need to maintain a residence,” says Ann Covington Alsina, a financial planner running her own firm in Annapolis, Md. “If the dishwasher breaks or the roof leaks, the landlord is responsible.”

    Wojtkowski agrees, noting that many people no longer want to spend time mowing the lawn or shoveling snow in retirement. “Ultimately, one of the things that I’ve seen most retirees most concerned with is eliminating the general upkeep [and] maintenance of homeownership in retirement,” he says.

    Several planners — including Covington Alsina and Wojtkowski — note that one alternative to selling and renting is simply downsizing. This can free up capital, especially when home prices are high, like now, without leaving you exposed to rising rents.

    Many baby boomers have been doing exactly that. 

    Meanwhile, I am reminded of my late friend Vincent Nobile, who — after a long and fruitful life owning homes and raising a family — found himself widowed and alone in his 80s. He rented a small cottage on a New England sound and said how glad he was that he never had to worry about maintaining the roof or the appliances, or fixing the plumbing or the heating, or any one of a thousand other irritations. Or paying property taxes — which go down even more rarely than rents.

    When the regular drives to Boston got too onerous, he moved into the city and rented there. And he was glad to do it. The money he had made was all in investments — a lot less hassle both for him and his heirs.

    I once asked him if he would prefer to own his own home. He shook his head and laughed.

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  • Construction spending inches up, showing signs of a recovery in housing

    Construction spending inches up, showing signs of a recovery in housing

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    The construction industry posted a slight gain in May as companies and the government increased spending on projects across the U.S.

    Spending on construction projects rose 0.9% in May to $1.93 trillion, the Commerce Department reported Monday. 

    Wall Street was expecting construction spending to rise 0.5% in April.

    Construction spending reveals how much the government and private companies spend on projects, from housing to highways. The more the U.S. spends on construction, the higher the level of economic activity. 

    The government revised spending on construction in April to 0.4% from an initial read of a 1.2% increase.

    Over the past year, construction spending was up 2.4%. 

    In terms of residential real estate, private residential construction fell 11.6% in May as compared to the previous year. It was up 2.2% as compared to April.

    Single-family construction rose on a month-over-month basis in May by 1.7%, but fell sharply by 25% from last year.

    Multifamily construction fell by 0.1% in May, but increased by 20.4% from last year.

    Spending on public residential construction rose by 0.1% from last month, and 12.3% from last year. The U.S. increased spending on public residential construction by 1.1% from last month, and 8.3% over the last year.

    The increase in spending May overall was “strong,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.

    “In particular, new residential activity jumped by 2.2%, reversing the cumulative declines recorded over the three prior months,” he added. “This lines up with the big increase in housing starts in May and adds to the growing body of evidence that the housing sector is bottoming out.”

    Stocks
    DJIA,
    +0.11%

    SPX,
    +0.04%

    were down in early trading on Monday. The 10-year Treasury note
    TMUBMUSD10Y,
    3.844%

    was around 3.8%.

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  • First Hawaiian Bank Sells 3,522 Shares of Quanta Services, Inc. (NYSE:PWR)

    First Hawaiian Bank Sells 3,522 Shares of Quanta Services, Inc. (NYSE:PWR)

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    First Hawaiian Bank lessened its stake in Quanta Services, Inc. (NYSE:PWRFree Report) by 21.9% during the 1st quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The fund owned 12,538 shares of the construction company’s stock after selling 3,522 shares during the period. First Hawaiian Bank’s holdings in Quanta Services were worth $2,089,000 as of its most recent filing with the Securities and Exchange Commission (SEC).

    Other large investors have also added to or reduced their stakes in the company. Vanguard Personalized Indexing Management LLC raised its stake in shares of Quanta Services by 2.3% during the 4th quarter. Vanguard Personalized Indexing Management LLC now owns 16,592 shares of the construction company’s stock worth $2,364,000 after acquiring an additional 374 shares in the last quarter. Bremer Bank National Association grew its stake in Quanta Services by 85.8% during the 4th quarter. Bremer Bank National Association now owns 19,564 shares of the construction company’s stock worth $2,787,000 after buying an additional 9,037 shares during the last quarter. Alpha Cubed Investments LLC raised its stake in Quanta Services by 10.3% in the fourth quarter. Alpha Cubed Investments LLC now owns 113,980 shares of the construction company’s stock valued at $16,242,000 after buying an additional 10,663 shares during the last quarter. Commonwealth Equity Services LLC boosted its holdings in Quanta Services by 26.2% in the fourth quarter. Commonwealth Equity Services LLC now owns 43,584 shares of the construction company’s stock worth $6,210,000 after acquiring an additional 9,049 shares in the last quarter. Finally, Impax Asset Management Group plc increased its holdings in shares of Quanta Services by 5.3% during the fourth quarter. Impax Asset Management Group plc now owns 6,561 shares of the construction company’s stock valued at $935,000 after acquiring an additional 331 shares in the last quarter. 88.80% of the stock is currently owned by institutional investors.

    Insiders Place Their Bets

    In other news, VP Dorothy Upperman sold 4,074 shares of the business’s stock in a transaction dated Wednesday, June 7th. The shares were sold at an average price of $183.87, for a total transaction of $749,086.38. Following the completion of the sale, the vice president now owns 13,078 shares of the company’s stock, valued at $2,404,651.86. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. In other news, EVP Derrick A. Jensen sold 100,000 shares of the company’s stock in a transaction on Monday, May 8th. The shares were sold at an average price of $169.36, for a total transaction of $16,936,000.00. Following the completion of the sale, the executive vice president now owns 282,225 shares of the company’s stock, valued at $47,797,626. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this link. Also, VP Dorothy Upperman sold 4,074 shares of the stock in a transaction dated Wednesday, June 7th. The shares were sold at an average price of $183.87, for a total transaction of $749,086.38. Following the completion of the sale, the vice president now owns 13,078 shares of the company’s stock, valued at $2,404,651.86. The disclosure for this sale can be found here. Over the last ninety days, insiders sold 247,074 shares of company stock worth $42,242,506. Company insiders own 1.20% of the company’s stock.

    Analyst Ratings Changes

    A number of brokerages have issued reports on PWR. The Goldman Sachs Group upped their price target on shares of Quanta Services from $150.00 to $171.00 and gave the company a “neutral” rating in a research note on Monday, April 17th. Northland Securities boosted their price target on Quanta Services from $171.00 to $190.00 in a research note on Thursday, May 18th. StockNews.com started coverage on Quanta Services in a research note on Thursday, May 18th. They issued a “hold” rating for the company. DA Davidson upped their target price on Quanta Services from $160.00 to $170.00 in a research report on Tuesday, May 9th. Finally, KeyCorp raised their price target on shares of Quanta Services from $174.00 to $190.00 in a research report on Monday, April 24th. Two analysts have rated the stock with a hold rating and five have issued a buy rating to the company. Based on data from MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average price target of $177.91.

    Quanta Services Stock Down 0.5 %

    PWR opened at $193.71 on Thursday. The company has a fifty day moving average of $176.47 and a two-hundred day moving average of $161.57. The stock has a market capitalization of $28.12 billion, a price-to-earnings ratio of 57.14 and a beta of 1.07. Quanta Services, Inc. has a fifty-two week low of $117.53 and a fifty-two week high of $195.14. The company has a debt-to-equity ratio of 0.74, a quick ratio of 1.58 and a current ratio of 1.63.

    Quanta Services (NYSE:PWRFree Report) last released its quarterly earnings results on Thursday, May 4th. The construction company reported $1.09 earnings per share for the quarter, topping analysts’ consensus estimates of $0.94 by $0.15. Quanta Services had a return on equity of 15.72% and a net margin of 2.86%. The company had revenue of $4.43 billion during the quarter, compared to analysts’ expectations of $4.08 billion. On average, research analysts expect that Quanta Services, Inc. will post 6.42 earnings per share for the current year.

    Quanta Services Dividend Announcement

    The business also recently declared a quarterly dividend, which will be paid on Friday, July 14th. Investors of record on Monday, July 3rd will be issued a $0.08 dividend. This represents a $0.32 annualized dividend and a yield of 0.17%. The ex-dividend date is Friday, June 30th. Quanta Services’s payout ratio is presently 9.44%.

    About Quanta Services

    (Free Report)

    Quanta Services, Inc provides infrastructure solutions for the electric and gas utility, renewable energy, communications, and pipeline and energy industries worldwide. The company’s Electric Power Infrastructure Solutions segment engages in the design, procurement, construction, upgrade, repair, and maintenance of electric power transmission and distribution infrastructure and substation facilities; installation, maintenance, and upgrade of electric power infrastructure projects; installation of smart grid technologies on electric power networks; and design, installation, maintenance, and repair of commercial and industrial wirings.

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    Institutional Ownership by Quarter for Quanta Services (NYSE:PWR)

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  • HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

    HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

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    Goodbye pandemic refi cash-outs. Hello HELOCs?

    Home-equity lines of credit (HELOCs) and second-lien mortgages have been staging a notable comeback as U.S. homeowners look for liquidity and ways to monetize the pandemic surge in home prices, according to BofA Global.

    It used to be that borrowers sitting on an estimated $33 trillion pile of equity built up in their homes could simply refinance and pull out cash, until the Federal Reserve’s rapid rate hikes began squelching the option.

    Now, with mortgage rates above 6%, and the Fed penciling in two more rate hikes in 2023, cash-strapped homeowners have been seeking out alternatives to extract cash from their properties.

    While cash-out refinances tumbled 83% in the fourth quarter of 2022 from a year before, HELOCs rose 7% and home-equity loans grew 31%, according to the latest TransUnion data.

    “Borrower demand remains high, particularly given household budgets have been pressured by rising food and energy costs,” a BofA Global credit strategy team led by Pratik Gupta’s, wrote in a weekly client note.

    Risky loans to subprime borrowers and home equity products helped precipitate the 2007-2008 global financial crisis and the era’s wave of devastating home foreclosures.

    At the time, households had more than $1.2 trillion of home equity revolving and available credit (see chart), whereas the figure was closer to $900 billion in the first quarter of this year.

    Home equity products are making a big comeback as households seek liquidity


    BofA Global, New York Fed Consumer Credit Panel/Equifax

    The pandemic saw home prices surge, giving a big boost to home equity levels. The Urban Institute pegged home equity in the U.S. at $33 trillion as of May, up from a post-2008 peak of about $15 trillion.

    BofA analysts argued this time home equity products look different, with roughly $17 trillion of tappable equity across 117 million U.S. homeowners, and most borrowers having high credit scores and low rates.

    “The vast majority of that — $14 trillion — is from the cohort of homeowners who own their homes free & clear,” Gupta’s team wrote.

    Another $1.6 trillion of equity could be available from Freddie Mac and Fannie Mae borrowers, according to his team, which pegged an estimated 94% of all outstanding U.S. first-lien home mortgages now below 4% rates.

    Major banks own the bulk of home equity balances (see chart), led by Bank of America Corp.
    BAC,
    +1.23%
    ,
    PNC Bank
    PNC,
    +0.57%
    ,
    Wells Fargo,
    WFC,
    -0.05%
    ,
    JPMorgan Chase
    JPM,
    +0.24%

    and Citizens
    CFG,
    +0.35%
    ,
    according to the team, which notes several other major banks appear to have hit pause on their programs.

    A smaller portion of HELOCs and second-lien mortgages have been securitized, or packaged up and sold as bond deals, while nonbank lenders have been offering the products as well.

    Stocks closed lower Monday, taking a pause from a recent rally, as investors monitored weekend tumult in Russia. The Dow Jones Industrial Average
    DJIA,
    -0.04%

    was less than 0.1% lower, while the S&P 500 index
    SPX,
    -0.45%

    was off 0.5% and the Nasdaq Composite
    COMP,
    -1.16%

    fell 1.2%, according to FactSet.

    Related: The economy was supposed to cave in by now. It hasn’t — and GDP is set to rise again.

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  • Tesla, Nvidia, Spirit Aerosystems, KB Home, Accenture, and More Market Movers

    Tesla, Nvidia, Spirit Aerosystems, KB Home, Accenture, and More Market Movers

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    Stock futures were falling following three straight days of losses for Wall Street. Federal Reserve Chairman Jerome Powell again will be delivering testimony before Congress. His comments on Wednesday that the central bank likely would be raising rates further this year pushed markets lower.

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  • Problem office loans are piling up in Chicago and Houston, but not yet in San Francisco

    Problem office loans are piling up in Chicago and Houston, but not yet in San Francisco

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    Key-card swipes don’t tell the whole story.

    Chicago, Philadelphia and Houston have some of the highest percentages of problem office loans when looking at delinquency rates and other early warnings signs of trouble, according to a new report by Barclays.

    That might come as a surprise, given that San Francisco has been making headlines for its broader commercial real estate woes, technology sector layoffs and struggles getting workers back to the office.

    But so far, it’s other cities like Philadelphia with a 14% rate of office loans at least 30 days delinquent (see chart), or Chicago where 21.2% of its office loans facing imminent default, triggering a transfer of their debt to a “special” loan servicer (Sp. Srv).

    Chicago, Houston and Philadelphia are top cities for trouble office loans


    Trepp, Barclays Research

    Researchers at Barclays based their findings on the performance of commercial property debt in metro areas with at least $2 billion of loans that were packaged into bond deals. They found that, “although there has been much discussion linking issues in the office sector with the very slow pace of return-to-office policies, we see very little correlation between performance of office collateral within various MSAs and Kastle’s weekly occupancy report.”

    Kastle’s most recent Back to Work Barometer showed Houston with a 61.6% rate of physical occupancy, above the 50% 10-city average. San Jose’s rate was pegged at below 39%, while the San Francisco metro area was near 45%, when looking at card swipes at more than 2,000 office buildings in 138 cities.

    But San Jose and Seattle were outperforming, both with no office loan delinquencies, few specially serviced loans or those on a watchlist for potential problems, according to Barclays.

    “Given that tech companies have pulled back from office occupancy and many have embraced remote work, we believe that office delinquencies will continue to rise,” wrote Lea Overby’s credit research team at Barclays, in a Tuesday client note.

    While Wall Street’s bond machine, known as the “commercial mortgage-backed securities (CMBS)” market, isn’t the biggest lender on U.S. office buildings, it’s the most transparent place to track loan performance in commercial real estate, because of its monthly public reporting requirements.

    Another caveat to the findings is that physical occupancy rates aren’t the same as in-place leases, which many companies continued to pay each month throughout the pandemic. Physical occupancy rates, however, can be a sign of tenant demand for future space.

    Higher interest rates, a mountain of maturing property debt and wobbling building prices have been pressuring landlords, with both Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen recently saying they continue to monitor the sector closely.

    Stocks were lower Tuesday, as investors awaited Chair Powell’s two days of testimony to Congress, with the Dow Jones Industrial Average
    DJIA,
    -0.72%

    off 200 points, or 0.6%, the S&P 500 index
    SPX,
    -0.47%

    off 0.4% and the Nasdaq Composite Index
    COMP,
    -0.16%

    0.2% lower, according to FactSet.

    Related: Blackstone wrote down its stake in this Chicago office building to $0. Now it’s talking with lenders on the debt coming due

    The S&P 500 Office REITs Sub-Industry Index
    SP500.40402040,
    -3.43%

    was down 1.1% Tuesday, but off 21% on the year so far, according to FactSet.

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  • U.S. housing starts surge as builders rev up single-family home construction in May, while a housing shortage drags on 

    U.S. housing starts surge as builders rev up single-family home construction in May, while a housing shortage drags on 

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    The numbers: Construction on new American homes jumped 21.7% in May, as homebuilders ramp up building single-family homes to meet strong demand from buyers.

    Housing starts rose to a 1.63 million annual pace last month from 1.34 million in April, the government said Tuesday. That’s how many houses would be built over an entire year if construction took place at the same rate in every month as it did in May.

    Economists were expecting a slight decline of about 0.8%. The numbers are seasonally adjusted.

    This is the second month in a row that starts are up. The pace of construction was the highest since last April, when starts hit a 1.8 million pace.

    The surge in construction this spring was led by the Midwest.

    Both single and multi-family construction rose in May. Keen interest from would-be home buyers is creating strong demand for new homes. These buyers continue to face a lack of options in the resale market. 

    Building permits, a sign of future construction, rose 5.2% to a 1.49 million rate.

    Key details: As the weather warms up, construction pace has picked up considerably.

    The construction pace of single-family homes rose 18.5% in May while apartment building rose 28.1%.

    Home builders were most active in the Midwest, where housing starts rose by 67% from the previous month. The Midwest also led the nation in terms of single-family construction.

    Permits for single-family homes rose 5.2% in May while permits in buildings with at five units or more rose 7.8%.

    Housing starts are up on an annual basis for the first time in nearly a year. The annual rate of total housing starts rose 5.7% from last May.

    Big picture: New construction is a bright spot in an otherwise despondent housing market. For the buyers who brave 6% mortgage rates, there are few options in the resale market, which continues to funnel demand for new homes. 

    In fact, demand is so strong that homebuilders are pulling back on sales incentives, such as price cuts, the National Association of Home Builders reported on Monday

    Builders also reported that they were feeling upbeat about the housing market for the first time in nearly a year.

    What are they saying? “To say that we did not see this one coming would not even come close to capturing the degree to which the May residential construction data caught us off guard,” Richard Moody, senior vice president and chief economist at Regions Financial Corporation, wrote in a note.

    “This is without question an exaggeration of the underlying reality and a reminder that the housing starts data are among the most volatile and random of the government’s major economic indicators,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.

    “Having said that,” he added, “the housing sector broadly appears to be healing remarkably fast after enduring a historic shock in affordability last year, when 30-year mortgage rates more than doubled.”

    Market reaction: U.S. stocks
    DJIA,
    -0.59%

    SPX,
    -0.39%

    were down in early trading on Tuesday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.721%

    rose above 3.7%.

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  • Home builders turn bullish for the first time in nearly a year amid strong housing demand

    Home builders turn bullish for the first time in nearly a year amid strong housing demand

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    The numbers: For the first time in nearly a year, home builders are upbeat about the housing market outlook.

    The shortage of previously-owned sales is helping to buoy builders’ confidence. 

    With mortgage rates above 6%, many homeowners find little incentive to sell—nearly 92% have an outstanding mortgage with a rate below 6%, according to a recent survey conducted by Redfin
    RDFN,
    -0.37%
    ,
    a brokerage and real estate listings company. And 23.5% of homeowners have a mortgage rate of less than 3%. Consequently, the number of new home listings has dropped by 22%, as compared with the same period a year ago, according to a Realtor.com housing trends report.

    In turn, home builders are feeling good about their business. The National Association of Home Builders’ (NAHB) monthly confidence index rose 5 points to 55 in June, the trade group said Monday.

    This is the sixth month in a row that sentiment has improved among builders. It is also the first time in 11 months that builder confidence has moved into positive territory of above 50.

    The June reading of 55 was the strongest since July 2022. A year ago, the index stood at 67.

    Key details: Builders were starting to pull back on sales incentives. The share of builders cutting prices to boost sales has dropped to 25% in June, from a peak of 36% in November 2022.

    The typical builder was cutting prices by 7% in June, the NAHB said.

    The three gauges that underpin the overall builder-confidence index were up.

    • A reading on current sales conditions rose by 5 points. 

    • A measure on future sales gained 6 points.

    • A gauge of traffic of prospective buyers rose by 4 points. 

    Big picture: Due to pandemic-era monetary policies that depressed mortgage rates, the home buyers, real-estate agents, mortgage brokers and the rest of the industry are stuck trying to find solutions to a major supply crunch of homes.

    Builders seem to be one of the few participants who have benefited from the supply crunch, given the nature of their business of new construction. The homebuilder ETF,
    XHB,
    -0.38%
    ,
    is up 25% year-to-date. 

    What the NAHB said: “A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” Robert Dietz, chief economist at the NAHB, wrote.

    And with the “Federal Reserve nearing the end of its tightening cycle,” the statement read, it’s “good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans.”

    Markets were closed on Monday in observance of the Juneteenth holiday.

    Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, also a subsidiary of News Corp.

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  • Stocks end mostly higher after Fed skips June rate hike but pencils in more this year

    Stocks end mostly higher after Fed skips June rate hike but pencils in more this year

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    U.S. stocks finished mostly higher on Wednesday in a choppy session that saw the Fed leave rates steady in June, while penciling in another 50 basis points of potential hikes later this year. The Dow Jones Industrial Average DJIA shed about 231 points, or 0.7%, ending near 33,980, according to preliminary FactSet data, or well off the session’s low of 33,783. The S&P 500 index SPX added about 3 points, or 0.1% and the Nasdaq Composite Index COMP closed 0.4% higher. “It’s just the idea that were are trying to get this right,” Fed Chairman Jerome Powell said about the potential mixed messaging of holding rates steady in…

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  • 4 REITs to Consider–and 2 to Avoid

    4 REITs to Consider–and 2 to Avoid

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    Postpandemic Las Vegas is booming. Above, the Luxor Hotel and Casino.


    Photo by Ethan Miller/Getty Images

    Real estate investment trusts have had a tough couple of years, but opportunities abound—if you know where to look.

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  • How to win a bidding war on an in-demand house, according to real-estate mogul Barbara Corcoran

    How to win a bidding war on an in-demand house, according to real-estate mogul Barbara Corcoran

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    Bidding wars are back, as limited housing-market inventory pits buyers against each other. To compete — and certainly to win — buyers need to come fully prepared, Barbara Corcoran says.

    Despite a sharp rise in the 30-year mortgage rate to nearly 7%, buyers aren’t able to catch a break, due to a shortage of listings. Competition for homes…

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  • Turkey’s Erdoğan wins again

    Turkey’s Erdoğan wins again

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    Recep Tayyip Erdoğan is set for another five years as Turkey’s president after winning a divisive election that at one point seemed to threaten his hold on power.

    The 69-year-old, who has dominated his country’s politics for two decades, was on track to win the runoff vote by 52 percent to 48 percent, with more than 99 percent of ballot boxes counted, beating opposition candidate Kemal Kılıçdaroğlu, according to preliminary official results from Turkey’s Supreme Election Council.

    In the first round of voting on May 14, the president also came out on top, defying the polls, but fell short of an outright majority, which triggered the runoff vote.

    Erdoğan declared victory in front of his residence in Istanbul, singing his campaign song before his speech. “I thank our nation, which gave us the responsibility of governing again for the next five years,” he said. 

    “We have opened the door of Turkey’s century without compromising our democracy, development and our objectives,” he added.

    Erdoğan also called on his supporters to take Istanbul back in the next local elections in 2024. His AK Party lost the city to the opposition in the 2019.  

    The triumphant president continued his campaign tactic of targeting LGBTQ+ people. “Can LGBT infiltrate AK Party or other members of the People’s Alliance [the broader coalition backing Erdoğan]? Family is sacred to us,” he said.

    Russia’s President Vladimir Putin and French leader Emmanuel Macron were among the first world leaders to congratulate Erdoğan on his victory. Both leaders emphasized working together on world affairs. The government of Qatar and Viktor Orbán, Hungary’s prime minister, also congratulated the re-elected president.  

    Erdoğan’s victory follows a campaign in which he accused his rival of being linked to terrorism and argued that the country faced chaos if the six-party opposition alliance came to power.

    He has ruled Turkey since 2003, first as prime minister and then as president, and the election has been widely seen as a defining moment for the country. 

    Erdoğan’s supporters say he has made the country stronger, but his critics argue that his authoritarian approach to power is fatally undermining Turkey’s democracy.

    Kılıçdaroğlu said it had been “the most unfair election process in years” in his own post-election speech.

    “All the resources of the state have been mobilized for one political party. They have been spread at the feet of one man,” he said. 

    The opposition candidate gave no indication that he was planning to resign, adding that the struggle would go on. 

    Erdogan taunted his rival, saying: “Bye, bye, bye Kemal.”

    By contrast with earlier elections in which the president and his Islamist-oriented AK party easily beat their secular rivals, Erdoğan headed into this May’s contest behind in the polls.

    His reelection campaign had to contend with economic problems such as painfully high inflation — currently 43 percent — and a weak currency, as well as the legacy of February’s devastating earthquake. At least 50,000 died in the disaster and the government was criticized for poor construction standards and its own slow response.

    But Erdoğan’s first round performance on May 14 put him five percentage points ahead of Kılıçdaroğlu and just a few hundred thousand votes short of an absolute majority.

    The opposition candidate then shifted to a more nationalist stance, promising to deport millions of Syrians and Afghans, but that move proved ultimately unsuccessful. Sinan Oğan, the nationalist candidate who won 5 percent in the first round then endorsed Erdoğan, not Kılıçdaroğlu.

    Political analysts say Erdoğan’s victory highlights the polarization in Turkish society, particularly divisions between Islamists and secularists. While much of Turkey’s coastline, the big cities and the largely Kurdish southeast voted for Kılıçdaroğlu, the heartlands strongly favored Erdoğan.

    Opposition supporters also argue that the election reflected Erdoğan’s grip on power, including his near-total influence on the country’s media, which is largely controlled by groups friendly toward the governing party.

    After Kılıçdaroğlu’s candidacy was backed by Turkey’s main pro-Kurdish party, Erdoğan accused his rival of being in league with Kurdish terrorists, showing a doctored video in the closing days of the campaign to make his case.

    This article has been updated to include reaction from Erdoğan.

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  • PacWest’s stock jumps 5% premarket on news bank to sell real estate  loans worth $2.6 billion

    PacWest’s stock jumps 5% premarket on news bank to sell real estate loans worth $2.6 billion

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    PacWest Bancorp.’s stock jumped 3% premarket Monday, after the bank announced asset sales that would allow it to focus on its core community banking business.

    The regional bank
    PACW,
    -1.88%

    said it has entered an agreement to sell a portfolio of 74 real estate construction loans with a principal balance of about $2.6 billion to a unit of real-estate investment company Kennedy Wilson Holdings.

    “Kennedy Wilson or its designees will also assume all remaining future funding obligations under the acquired loans of approximately $2.7 billion,” PacWest said in a regulatory filing.

    The bank has also agreed to sell an additional six real estate construction loans to Kennedy Wilson with a principal balance of about $363 million.

    The sale of the loans is subject to Kennedy Wilson’s satisfactory due diligence. The company will place $20 million into a third-party escrow account that will be refundable.

    The deal is expected to close in several tranches in the second and third quarters. “There can be no assurance that the transaction will be completed in part or at all,” said the filing.

    See also: FDIC set to levy big banks to pay for $15.8 billion bailout of Silicon Valley, Signature Banks

    PacWest shares are down 75% in the year to date, after being caught up in the regional-bank stock rout that followed the collapse of Silicon Valley Bank in March.

    The bank said it lost 9.5% of deposits during the week ending May 5 amid market volatility following JPMorgan’s
    JPM,
    -0.23%

    rescue of First Republic Bank.

    See: Here’s why people are still worried about regional banks and commercial real estate

    Other regional banks were also rising premarket. Western Alliance Bancorp. was up 0.4% and KeyCorp. was up 1.7%.

    The S&P 500
    SPX,
    -0.14%

    has gained 9% in the year to date.

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